Chapter 9 Judgment & Decision Making Based on Low Consumer Effort

Learning Objectives~ Ch. 9 To understand: 1.Heuristics & simple judgment 2.Conscious & unconscious decisions 3.Hierarchy of effects, decision heuristics, & operant conditioning 4.Thought-based strategies of performance tactics, habit, brand loyalty, price-related tactics, & normative influences 5.Feeling-based strategies of affective tactics, variety seeking, & impulse purchasing

Judgment & Decision Making: Low Consumer Effort

Shortcuts in Making Low- Effort Judgments A heuristic is a “rule of thumb” to simplify things A. Representativeness Heuristic: Comparing a stimulus with the category prototype/exemplar B. Availability Heuristics: Basing judgments on events that are easier to recall –Base-Rate Information –Law of Small Numbers

Unconscious Low-Effort Decision Making You may make a decision without being consciously aware of how or why you are doing so. Example? Use of all senses Environmental stimuli Automatic goal-relevant behavior

Conscious Low-Effort Decision Making Low-Effort vs. High-Effort Decision Making Hierarchy of Effects –Thinking > Feeling > Behaving –Passive/Incidental Learning –Post-Purchase –Thinking > Behaving > Feeling Simplifying Strategies –Optimizing –Satisfice

Hierarchy of Effects

Consumer Learning Process

How Consumers Learn to Apply Choice Tactics Choice tactic: simple rule of thumb consumers use to make low-effort decisions Consumers may learn choice tactics via: Operant Conditioning: behavior is ƒ(previous actions & reinforcements or punishments obtained from these actions) –Reinforcement –Punishment –Repeat Purchase Choice = Product Dependent

Simplifying Strategies in Low Elaboration Contexts Recall, in low effort contexts (e.g., beverage) consumers apply different choice tactics than in high effort contexts (e.g., new car) Simplifying Strategies: When MAO is low, consumers are motivated to simplify the cognitive process with heuristics How a message is framed influences how consumers react

Choice Tactics 1. Performance-related 2. Habit 3. Brand Loyalty 4. Price 5. Normative influences 6. Feelings/affect 7. Variety Seeking (note, you may recognize these in the left box of the consumer-learning process figure shown prior)

1. Performance as a Simplifying Strategy Performance-Related Tactics: when the outcome of the consumption process is positive reinforcement Can be an overall evaluation of performance, or focused on a specific attribute or benefit –Quality –Important features/benefits –Sales promotions

2. Habit as a Simplifying Strategy Having a habit (e.g., in the grocery store) is a simplifying strategy Habits can make life simpler & or more manageable Habit—Repeat Purchase, Shaping –Little/no information sought –Little/no evaluation of alternatives –Promotion/distribution policies

3. Brand Loyalty as a Simplifying Strategy Brand/Multibrand Loyalty –Purchase pattern + commitment to brand –Cognitive lock-in –Resistant to competitive efforts –Quality/Satisfaction

4. Price as a Simplifying Strategy Marketer Side Price Considerations: -Coupons -Price-offs -Rebates -Two-for-ones -Savings must be: at or above the just noticeable difference & within zone of acceptance -Special pricing must not be used too often or risk of dilution Consumer Side Price Considerations: -Zone of Acceptance -Price Perceptions -Deal-Prone Consumers -Price consciousness is not static

5. Normative Influences as a Simplifying Strategy Others can influence consumers’ low-elaboration decision making Normative Influences –Direct –Vicarious –Indirect

6. Feelings/Affect as a Simplifying Strategy Affect: low level feelings Think of a brand you just like, & you don’t really know why. Affect does not necessarily result from a conscious recognition of need satisfaction Affect is weaker than attitude Affect referral: the “how do I feel about it heuristic” Affect is often generated from brand familiarity The mere exposure effect Visual Attributes Co-Branding

7. Decision Making Based on Variety-Seeking Needs Variety-Seeking Needs (e.g., in soft drinks) –Satiation/Boredom –Optimal Stimulation/Sensation Seekers –Vicarious Exploration Buying on Impulse/Impulse Purchases –Intense feeling –Disregard negative consequences –Euphoria/Excitement –Conflict between control vs. Indulgence –What impacted your last impulse purchase?

Consumer $ Saving Strategies

Under low-effort decision making, consumers often use performance tactics to choose a brand. This ad demonstrates that Tostitos Salsa Con Queso contains real cheese. The important feature of the brand is emphasized in the ad & packaging. Courtesy Frito-Lay, Inc.

Questions?